British Finance Minister Reveals Tax Hike Plans - What You Need To Know
By Andy Bruce
British finance minister Rachel Reeves is gearing up to announce tax increases in her upcoming budget presentation, but with a promise to spare "working people" from the burden. Reeves, who leads the Labour government following a decisive election victory, has inherited a substantial 22 billion pound hole in the public finances.
Despite the need for tax hikes, Reeves has pledged to uphold Labour's manifesto commitments by avoiding increases in income tax, national insurance, value-added tax, and corporation tax rates. Here are some of the options she might consider:
CAPITAL GAINS TAX
With the potential to raise significant revenue, Reeves could target capital gains tax (CGT), which brought in 15 billion pounds in the last financial year. By adjusting CGT rates and reintroducing indexation to account for inflation, she could generate an additional 7.5 billion pounds. Another option could involve raising taxes on dividends.
INHERITANCE TAX
Reforming inheritance tax, which currently impacts only a small fraction of estates, could provide a revenue boost. Adjusting allowances for assets like family businesses and farmland might yield an extra 2.7 billion pounds annually.
PENSION REFORMS
Tweaking pension tax reliefs, such as reducing the tax-free lump sum allowance or changing relief rates for higher earners, could result in substantial revenue gains over time.
FUEL DUTY
Reeves may also consider ending the freeze on fuel duty, a move that past governments have avoided due to concerns about public backlash. This could not only improve the government's environmental image but also contribute to the public purse.
Overall, these tax changes could have a significant impact on government revenue and individual finances. It's essential for taxpayers to stay informed about potential policy shifts and consider how they might be affected by these upcoming budget decisions.